PCAL in deep water?

In the recent past, Penden Cement Authority limited has seen a dip in its fortunes

PCAL:The managing director of Penden Cement Authority limited (PCAL), (Dr) Jigme Singye, recently submitted his resignation to leave behind a company that’s beset by problems lately.

The managing director didn’t comment on his resignation.

Kuensel sources said that an Indian firm, Gita Devi in Ethelbari, West Bengal recently filed a case against PCAL in the Kolkata high court. Gita Devi firm complained of “inferior quality” cement it bought from Penden Cement and has demanded about Nu 40 million in damages.

Following a breakdown of the cement mill, Penden Cement was also unable to produce cement for more than 10 days.  However, cement production resumed on April 7.

(Dr) Jigme Singye said the production was halted because of annual maintenance work.

As India is the largest market, (Dr) Jigme Singye also said that the market has now become competitive, with the entry of more brands in northeast India. “Competition is stiff in the market,” he said, adding that discounts were offered to increase sales.

Penden Cement officials said the cement from northeast India receives about 90 percent subsidy in transport to bring their cement to West Bengal.

The operation of Dungsam Cement plant has also left Penden Cement’s domestic market slightly deterred.  The domestic market share dropped by at least three percent after Dungsam started production.

Although Dungsam has taken over the supply for the ongoing mega power projects, an understanding was reached last year, where Penden Cement could still supply 25 percent of the requirement, while 75 percent was supposed to be Dungsam’s supply share.

However, Penden Cement has completely stopped supplying cement to the mega hydropower projects today because, according to (Dr) Jigme Singye, the company decided to focus more on the Indian market.

The company’s profit last year has also dropped from the previous years.  Records with the company show a drop of almost 23 percent in profit (after tax deduction).

In 2014, it made a profit of Nu 208.01M (million), while it was Nu 272.04M in 2013. In 2012, the company made Nu 351.91M.

However, (Dr) Jigme Singye said that the company was able to achieve 93 percent of the target set in terms of production. “But we couldn’t meet the target in terms of profitability,” he said.

Penden Cement was able to dispatch 372,353 MT (metric tonnes) of cement in 2014, which is an increase from 348,722 MT in 2013.

However, even though the first quarter has elapsed, sources said the company was unable to produce and sell 40,000MT of cement as targeted in the first quarter.

Sources also said that due to an ambiguous recruitment process, the company’s human resources are misplaced.  There are two mechanical engineers and a chemist in the sales department.

An employee that should have been in the production is with the purchase department.  In addition, one more production employee is also working in the department that deals in raw materials.

Its company secretary is also an electrical engineer, while a person, who is qualified to be in the stores material management, is also spearheading the procurement section.

The company has about 1,000 employees, of which, more than 500 are regular, while the rest includes national workforce and temporary workers.

Last year, Penden Cement contributed Nu 96.43M as corporate tax, which, however, is a drop from 2013’s Nu 128.29M.  It also contributed Nu 16.07M in royalty and minerals rent last year.

By Rajesh Rai, Gomtu

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